KQ's turnaround: National Carrier posts Sh5.4 billion profit after a decade of losses

National Carrier Kenya Airways has broken an 11-year full-year profit dry spell to post Sh5.4 billion in net earnings for the year that ended December 31, 2024.

This represents a remarkable turnaround from a loss of Sh22.6 billion reported the previous year, reflecting an improvement of Sh28 billion and a 124 per cent increase in net profit.

Although the airline, known internationally as KQ, posted a half-year profit of Sh513 million, it has never posted a full-year profit in over a decade since 2013.

The airline’s boss, Allan Kilavuka, attributed the growth to the effectiveness of the recovery strategy under Project Kifaru, which has focused on enhancing operational performance through various initiatives and delivering exceptional customer service through specific actions.

"Despite the ongoing global challenges faced by the aviation industry, such as shortages of aircraft, engines, and spare parts, our turnaround strategy is yielding positive results. We are dedicated to completing our capital restructuring plan to reduce financial leverage, enhance liquidity, and remain an attractive investment for strategic investors,’’ Kilavuka said.

However, investors will have to wait a little longer for dividend payout due to the negative equity position.

Kilavuka said that the profit earned will be reinvested, adding that the airline is still focused on attracting a strategic investor to ensure long-term sustainability.

He added that the company is committed to optimising its network, investing in fleet expansion, modernizing cabin interiors, and diversifying business segments to ensure sustainable growth while adapting to the evolving dynamics of the aviation industry.

Turnover rose by six per cent to Sh188.5 billion from Sh178.5 billion in he previous financial year, driven by increased passenger numbers, which grew by four per cent to 5.2 million, netting Sh12.2 billion in revenue.

Cargo volumes grew by 25 per cent to hit a historic high of 70.8 million tonnes.

The return to profitability is likely to boost the airline’s share, which returned to the Nairobi Securities Exchange (NSE) early this year, prompting a bullish response from investors that saw it almost double in price to Sh6 from Sh3.83.

The shares were initially suspended from trading in July 2020 after the government proposed a new law to nationalise the airline and rescue it from mounting debts amid the COVID-19-induced slump in global air travel.

However, the nationalisation plan was shelved after the airline showed signs of recovery.

On Tuesday, Kenya Airways share closed the market as the 14th most valuable stock on the NSE with a market capitalisation of Sh29.7 billion, which makes about 1.46 per cent of the Nairobi Securities Exchange (NSE) equity market.

Early this month, the National Treasury said it would offer banks that own a stake in Kenya Airways (KQ) a compensation of upto  Sh6. 425 billion, should the lenders sell their shares below the principal loan they extended to the troubled airline.

In 2022, the Kenyan government intervened by taking on the debt, converting it to local currency, and restructuring the tenure, thereby providing the airline with much-needed relief.

After converting debt into equity, local commercial banks own around 38.1 per cent of the company.

The Kenyan government holds the largest stake at 48.9 per cent, while KLM Royal Dutch Airlines (7.8) and minority shareholders (2.8) also have interests in the carrier.